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Well Balanced | Financial Planning, Bucket-Based Investing, Market Perspective, Wealth Management. A passionate and entertaining look at money and investing in and for retirement. For those that enjoy podcasts like Smart Money, On Investing, and BiggerPockets, Well Balanced is worth adding to your feed. Disclosures about our firm and this podcast. Vector Wealth Management is registered as an investment adviser with the Securities Exchange Commission (SEC). Registration as an investment adviser does not constitute an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability. A copy of Vector’s current written disclosure brochure filed with the SEC discusses among other things, Vector’s business practices, services, and fees, and is available through the SEC’s website at: www.adviserinfo.sec.gov. All content in this podcast is for information purposes. Opinions expressed herein are solely those of Vector Wealth Management, our staff, and guests. Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed directly and in detail with your financial advisor prior to implementation. This podcast and related content are not intended to render personalized investment advice, nor should it be viewed as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities or strategies discussed. Please note that neither Vector Wealth Management nor any of its agents give legal or tax advice. The firm is not engaged in the practice of law or accounting. Charts, graphs, and returns do not represent the performance of Vector Wealth Management or any of its advisory clients. Returns do not reflect the impact that advisory fees and other expenses would on the results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. All investment strategies have the potential for profit or loss. Past performance is not indicative of future performance. Visit vectorwealth.com/regulatory for the firms form CRS and ADV.
Episodes
Thursday Aug 08, 2024
Thursday Aug 08, 2024
Did you know that individuals can gift up to $18,000 without incurring any tax? For married couples, this amount can be doubled to $36,000 through gift splitting, making it a powerful tool for transferring wealth. In our latest podcast episode, senior wealth advisor Mike Nesheim discusses the annual gift tax exclusion, among other financial planning strategies for intra-generational wealth transfer.
When gifting highly appreciated assets such as stocks or real estate, Mike says donors should understand that the gift recipients will take on the capital gains tax liability–advantageous if the recipient is in a lower tax bracket. However, assets inherited after the donor passes can benefit from a step-up or reset in cost basis, meaning potentially zero capital gains tax owed by the recipient if sold without further gain.
Additionally, we explore the benefits of making direct payments for education and medical expenses. Such payments can be made without affecting the annual gift tax exclusion, offering a strategic way to support loved ones financially without additional tax burdens.
This episode is the third in our series on intra-generational wealth transfer. The other discussions are here: Trusts, Beneficiaries, and Financial Planning and here: Intra-Generational Wealth Transfer.
Key Points and start times from the conversation with Mike Nesheim:
– Jump to a topic or listen from the beginning.
Understanding Gift Tax Limits
Start Time: 00:03
The gift tax annual exclusion allows individuals to gift up to $18,000 per person without tax implications, and the concept of gift splitting for married couples.
Estate Tax Basics
Start Time: 02:13
Explanation of federal estate tax exemptions, current limits, and future potential changes. Emphasis on the high exemption amounts and their implications for estate planning.
Minnesota State Estate Tax
Start Time: 04:00
Detailed look at Minnesota's estate tax rules, including the $3 million exemption limit and non-portability between spouses. Discussion on strategies to maximize exemptions.
Managing Capital Gains Through Gifting
Start Time: 05:16
Considerations for gifting highly appreciated assets to take advantage of lower tax brackets of recipients and the concept of stepped-up cost basis for inherited assets.
Gifting Non-Cash Assets
Start Time: 07:01
Addressing the complexities of gifting non-cash assets such as jewelry, real estate, and the impact on gift tax exemptions.
Gifting from IRAs and 401(k)s
Start Time: 09:19
Rules and limitations around gifting retirement account assets, the need for taxable withdrawals, and strategic considerations.
Educational and Medical Expense Gifting
Start Time: 10:49
Explanation of unlimited gifts for tuition and medical expenses if paid directly to institutions, and how these do not count towards the $18,000 annual gift tax exclusion.
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